Herbalife Nutrition Raises Full Year 2021 Guidance;

Reports Record First Quarter Net Sales with Growth of 18.9% Versus Prior Year

LOS ANGELES, May 4^th, 2021 – Herbalife Nutrition Ltd. (NYSE: HLF) today reported financial results for the first quarter ended March 31, 2021:

 

HIGHLIGHTS

 

▪	First quarter 2021 net sales of $1.5 billion, an 18.9% increase compared to the first quarter 2020.  Five of six geographic regions reported year-over-year net sales growth in the quarter.

▪	March worldwide net sales set a single-month, net sales record.

▪	First quarter 2021 reported diluted EPS of $1.33 and adjusted1 diluted EPS of $1.422, compared to $0.32 and $0.882, respectively, for the first quarter 2020.  First quarter 2021 adjusted earnings per share increased 61.4% compared to the first quarter 2020.

▪	Raising FY 2021 net sales guidance ranges to 9.0% to 15.0% growth, as well as raising FY 2021 reported and adjusted1 diluted EPS guidance ranges to $4.41 - $4.81 and $4.65 – $5.05, respectively.

MANAGEMENT COMMENTARY

 

The Company’s double-digit net sales growth of 18.9% in the first quarter is a reflection of the long-established strategy and growth trajectory that started in 2018. The demand for Herbalife Nutrition products, combined with the determination and entrepreneurial spirit of the Company’s independent distributors, resulted in first quarter net sales of $1.5 billion, which is a record for the Company.

 “This quarter we delivered record first quarter results with net sales growth of 18.9%, as our distributors delivered valuable nutrition solutions to consumers around the world,” said John Agwunobi, Chairman and CEO of Herbalife Nutrition.

The Company is seeing continued consumer interest in health and wellness products which is driving demand for its range of nutritional product offerings. The Company’s global products and direct sales channel allow its independent distributors to support consumers as they reach their nutrition goals.

The fundamentals of the business are strong, evidenced by year-over-year growth and the record first quarter. Five of the Company’s six regions experienced net sales growth with three of the six regions: North America, Asia Pacific and EMEA, growing by more than 20%. In particular, India set a new quarterly net sales record for the third quarter in a row, with year-over-year growth of 37%.  Additionally, the Company is seeing the first net sales benefit from currency since the fourth quarter 2017, as currency was a net sales tailwind of approximately 180 bps, excluding Venezuela.

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Based on the continued increased growth in net sales, the Company’s new guidance calls for net sales growth to be in a range of 9% to 15%, up from its prior range of 6% to 14%.  Additionally, the midpoint of our reported and adjusted¹ diluted EPS guidance range increased by approximately 7%.

The demand for the Company’s full line of nutrition products and adaption of technology tools provided by the Company to its independent distributors contributed to double-digit growth in over 50 of the Company’s markets.  The Company’s sports nutrition line continues to drive growth, with worldwide net sales in energy, sports, and fitness category increasing approximately 34% during the first quarter.  Furthermore, the Company’s targeted nutrition category, which includes health and wellness products, grew by 21% while the core weight management product category grew by 16% in the quarter.  Moreover, consumer facing technology used by the Company’s independent distributors to interact with their customers, particularly in cases where face-to-face interactions are unable to take place, was also a key factor in helping drive growth.

The company will host a virtual Investor Day in August 2021.

Regional Net Sales and Foreign Exchange (“FX”) Impact

^(b) Venezuela has been generally impacted by significant price increases and erosion in foreign currency exchange rates. Venezuela represents less than 1% of the Company’s consolidated net sales.  See Schedule A – “Reconciliation of Non-GAAP Financial Measures” for a discussion of why we believe adjusting for Venezuela is useful.

* Figure not meaningful due to significant foreign currency fluctuations in Venezuela and the price increases implemented as a result thereof that, when considered in isolation, have a disproportionately large impact on the Company’s South and Central American region and consolidated results. Amounts were 23.0% and 17.8% for South & Central America and Worldwide Total, respectively.

Regional Volume Point Metrics

Following is the Company’s second quarter and updated full year 2021 guidance based on current business trends:

▪	With respect to guidance, the Company cannot accurately predict the impact to its share base from any future share repurchases. Accordingly, any impact thereof is excluded from the guidance table above.

▪	Guidance is based on the average daily exchange rates for the first two weeks of April 2021.

▪	Adjusted(a)(b)(c) diluted EPS guidance for the second quarter 2021 includes a projected currency tailwind of approximately $0.19 per diluted share versus the second quarter 2020.

▪

Full year 2021 adjusted(a)(b)(c) diluted EPS guidance includes a projected currency tailwind of approximately $0.12 per diluted share versus the full year 2020. This $0.12 tailwind is $0.23 unfavorable as compared to the expected $0.35 tailwind included in the full year 2021 guidance provided on February 17, 2021.

 

Herbalife Nutrition senior management will host an investor conference call to discuss its recent financial results and provide an update on current business trends on Tuesday, May 4th, 2021, at 2:30 p.m. PT (5:30 p.m. ET).

The dial-in number for this conference call for domestic callers is (833) 962-1459, and (956) 394-3596 for international callers (conference ID: 3526984). Live audio of the conference call will be simultaneously webcast in the investor relations section of the Company's website at http://ir.Herbalife.com.

An audio replay will be available following the completion of the conference call in MP3 format or by dialing (855) 859-2056 for domestic callers or (404) 537-3406 for international callers (conference ID: 3526984). The webcast of the teleconference will be archived and available on Herbalife Nutrition's website.

Herbalife Nutrition is a global company that has been changing people's lives with great nutrition products and a proven business opportunity for its independent distributors since 1980. The Company offers high-quality, science-backed products, sold in over 90 markets by entrepreneurial distributors who provide one-on-one coaching and a supportive community that inspires their customers to embrace a healthier, more active lifestyle. Through the Company’s global campaign to eradicate hunger, Herbalife Nutrition is also committed to bringing nutrition and education to communities around the world.

For more information, please visit IAmHerbalifeNutrition.com.

Herbalife Nutrition also encourages investors to visit its investor relations website at ir.herbalife.com as financial and other information is updated and new information is posted.

213.745.0420

Investor Contact:

Eric Monroe

Senior Director, Investor Relations

213.745.0449

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This release contains “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and to inherent risks and uncertainties, many of which are beyond our control. Additionally, many of these risks and uncertainties are, and may continue to be, amplified by the COVID-19 pandemic. Important factors that could cause our actual results, performance and achievements, or industry results to differ materially from estimates or projections contained in or implied by our forward-looking statements include the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

We do not undertake any obligation to update or release any revisions to any forward-looking statement or to report any events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as required by law.

Supplemental Information

SCHEDULE A: RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(Unaudited and unreviewed), (All tables provide Dollars in millions, except per Share Data)

Adjusted Net Income and Adjusted Diluted EPS

In addition to its reported results and guidance calculated in accordance with GAAP, the Company has included in this release adjusted net income and adjusted diluted EPS, performance measures that the Securities and Exchange Commission defines as “non-GAAP financial measures.”  Management believes that such non-GAAP financial measures, when read in conjunction with the Company’s reported or forecasted results, in each case calculated in accordance with GAAP, can provide useful supplemental information for investors because they facilitate a period to period comparative assessment of the Company’s operating performance relative to its performance based on reported or forecasted results under GAAP, while isolating the effects of some items that vary from period to period without any correlation to core operating performance and eliminate certain charges that management believes do not reflect the Company’s operations and underlying operational performance.  The Company’s definition of adjusted net income and adjusted diluted earnings per share may not be comparable to similarly titled measures used by other companies because other companies may not calculate them in the same manner as the Company does and should not be viewed in isolation from nor as alternatives to net income or diluted EPS calculated in accordance with GAAP.

Venezuela Adjustments

The impact of foreign currency fluctuations in Venezuela and the price increases the Company implements as a result of the highly inflationary economy in that market can each, when considered in isolation, have a disproportionately large impact to the Company’s consolidated results despite the offsetting nature of these drivers and that net sales in Venezuela, which represent less than 1% of the Company’s consolidated net sales, are not material to our consolidated results. Therefore, in certain instances, the Company believes it is helpful to provide additional information with respect to these factors as reported and excluding the impact of Venezuela to illustrate the disproportionate nature of Venezuela’s individual pricing and foreign exchange impact to the Company’s consolidated results. However, excluding the impact of Venezuela from these measures is not in accordance with U.S. GAAP and should not be considered in isolation or as an alternative to the presentation and discussion thereof calculated in accordance with U.S. GAAP.

China grant income is no longer excluded from the Company’s adjusted results and prior period information has been updated to reflect the current period presentation.

The following is a reconciliation of net income, presented and reported in accordance with U.S. generally accepted accounting principles, to net income adjusted for certain items:

		Three Months Ended
		3/31/2021				3/31/2020
		(in millions)
Net income, as reported		$	147.4			$	45.6
Expenses related to regulatory inquiries and legal accruals (1) (2) (3)			-				84.5
Non-cash interest expense and amortization of non-cash issuance costs (1) (2) (4)			5.7				5.2
Debt issuance costs related to the senior secured credit facility amendment (1) (2) (5)			1.1				0.5
Net expenses related to COVID-19 pandemic (1) (2)			4.8				5.8
Income tax adjustments for above items (1) (2)			(1.2	)			(18.4	)
Net income, as adjusted		$	157.8			$	123.2

		Three Months Ended
		3/31/2021				3/31/2020
		(per share)
Diluted earnings per share, as reported		$	1.33			$	0.32
Expenses related to regulatory inquiries and legal accruals (1) (2) (3)			-				0.60
Non-cash interest expense and amortization of non-cash issuance costs (1) (2) (4)			0.05				0.04
Debt issuance costs related to the senior secured credit facility amendment (1) (2) (5)			0.01				-
Net expenses related to COVID-19 pandemic (1) (2)			0.04				0.04
Income tax adjustments for above items (1) (2)			(0.01	)			(0.13	)
Adjusted diluted earnings per adjusted share (6)		$	1.42			$	0.88

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⁽⁴⁾ Relates to non-cash expense on the Company's 2.625% convertible senior notes due 2024.

⁽⁵⁾ The 2021 amount relates to costs incurred in the amendment of the senior secured credit facility, which, among other things, reduced the interest rate for borrowings under the Term Loan B. The 2020 amount relates to costs incurred in the amendment of the senior secured credit facility which, among other things, extended the maturity, increased borrowings and reduced interest rate of both Term Loan A and 2018 Revolving Credit Facility. There is no per share amount for 2020 due to rounding.

⁽⁶⁾ Amounts may not total due to rounding

The following is a reconciliation of diluted earnings per share guidance, presented in accordance with U.S. generally accepted accounting principles, to adjusted diluted earnings per share guidance for certain items.

	Three Months Ending		Twelve Months Ending
	June 30, 2021		December 31, 2021
Diluted EPS Guidance	$1.17 - $1.32		$4.41 - $4.81
Non-cash interest expense and amortization of non-cash issuance costs (1)	0.05		0.20
Net expenses related to Covid-19 pandemic (2)	0.00		0.04
Debt issuance costs related to the senior secured credit facility amendment (3)	0.00		0.01
Income tax adjustments for above items (4)	(0.00)		(0.01)
Adjusted diluted EPS guidance	$1.22 - $1.37		$4.65 - $5.05

(1) Relates to non-cash expense on our convertible notes.

(2) Excludes tax impact of $1.1 million for the twelve months ending December 31, 2021.

(3) Relates to costs incurred in the amendment of the Term Loan B.  Excludes tax impact of $0.2 million for the twelve months ending December 31, 2021.

(4) Aggregates the individual tax impacts of each item as described in greater detail in footnotes 2 and 3 above.